"~.r, WINDFALL ELIMINATION PROVISION GOVERNMENT PENSION OFFSET AND PUBLIC EMPLOYEE PENSIONS Prepared by Middlesex County Retirement System

Transcription

1 "~.r, WINDFALL ELIMINATION PROVISION GOVERNMENT PENSION OFFSET AND PUBLIC EMPLOYEE PENSIONS Prepared by Middlesex County Retirement System

2 "WINDFALL ELIMINATION PROVISION" (WEPl This applies to individuals who are eligible for a Social Security retirement benefit based on their own work in the private sector. WEP means the Social Security retirement benefit may be lowered when the public pension begins. Social Security benefits will never be eliminated. It is a formula change. Definitions "Date first eligible" The date an individual first meets all requirements for payment, except stopping work and applying for the payments. Pension eligibility is determined by the agency paying the pension. Employment vesting does not in itself constitute pension eligibility. "Pension" Any periodic or lump sum payment received from a defined benefit or defined contribution plan. Lump sum payments are prorated and subject to WEP. Payments from 457 plans from public employers not paying into Social Security, if the plan is the primary retirement plan. "Monthly pension amount" The pension amount used for WEP includes the monthly amount payable before any reduction for health insurance, survivor annuities, allotments, assignments of pension, etc. "Withdrawals" Withdrawals of employee's own contributions and interest made before the employee is eligible to receive a pension are not subject to WEP if the employee forfeits all rights to the pension. Withdrawals of the employee's own contributions and interest made after the employee is eligible to receive a pension are considered a lump-sum pension for WEP purposes.

3 WEP will not apply if any of the following are met: Individual was age 62 by 1/86 Individual was eligible to retire from public service by 1/86 Individual has at least 30 years of what Social Security considers "substantial earnings" in the private sector (see link below for yearly amounts) WEP will not be imposed until the public pension begins. At the Social Security "Full Retirement Age",the earnings limit is eliminated. This means a public employee can begin to receive Social Security benefits and still continue working, regardless of how much they earn. Social Security retirement payments will not be subject to WEP while employment continues. Changes in pension amount will not affect the initial WEP calculation. Social Security links for WEP: TOPIC Social Security Website LINK W\!\Tw.socialsecurity.gov Create a "MySS" account wwvv.socialsecurity. goyjmyaccount WEP and "substantial \f\l\n\.rv.socialsecurity.govirlanners!retire/gpo-\f\tep.html earnmgs. " Form to report pension for \l\iwvlj.5ocialsecurity.govjforms/ssa-1so.pdf WEP WEP online calculator W\lvw.socialsecurity.gov Iplanners /retire! any Pia VVe12j s04:.html

4 tlgovernment PENSION OFFSET" (GPO) This applies to individuals who apply for Social Security on a living or deceased Social Security wage earner. This means spouses, divorced spouses, widows, widowers, and surviving divorced spouses who qualify based on Social Security's definition. The spousal benefit will be offset by an amount equal to 2/3 of the monthly public pension. Definitio ns: "Spouse" See Social Security link. "Date first eligible" "Offset" "Pension" The date an individual first meets all requirements for payment, except stopping work and applying for the payments. Pension eligibility is determined by the pension paying agency. Offset is the reduction of Social Security spousal benefits due to receipt of the public pension. Any periodic or lump sum payment received from a defined benefit or defined contribution plan. Lump sum payments are prorated and subject to GPO. Payments from 457 plans from public employers not paying into Social Security, if the plan is the primary retirement plan. "Monthly pension amount" The pension amount used to determine GPOis the monthly amount payable before any deduction for health insurance, allotments, or bonds. "Withdrawals" Withdrawals of a pension plan, before or after eligibility for the pension, of only employee contributions plus any interest (none of the employer contributions are included in the Withdrawal) whereby the employee relinquishes all rights of the pension plan will not be subject to GPO.

5 If 2/3 of the public pension is greater than the Social Security spousal benefit, no Social Security is payable. If the 2/3 amount is less, a partial Social Security payment is made. GPOwill not be imposed until the public pension begins. At the Social Security "Full Retirement Age",the earnings limit is eliminated. This means a public employee can begin to receive Social Security spousal benefits and still continue working, regardless of their earnings. Social Security payments are not subject to GPOwhile employment continues. A change in the monthly pension amount such as periodic cost of living adjustments will affect the pension amount. Individuals receiving a public pension as a survivor annuitant are not subject to GPO. This provision only affects the individual who was employed in the public sector. Social Security links for GPO: TOPIC Social Security Website Create a "MySS" account GPO calculator Definition of "spouse" LINK Vif'Nw.socialsecurity.gov WVvvv.socialsecurity.gov Imyaccount \VV\T\M.socialsecurity.gov!planners!retire!gpo-wep.html VVwvv,socialsecurity.gov /planers/retirejapplying6.html Form to report pension for GPO wvvw.socialsecurity.gov Iforms/ssa-3885.pdf